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EU Exit Business Readiness Forum 7th February 2019

The Department for Business, Energy and Industrial Strategy (BEIS) held their second EU Exit Business Readiness Forum on Thursday 7th February at BEIS central London offices in Victoria. The forum was again hosted by Donna Leong, Director EU Exit Business Readiness in BEIS with panellists Phil Bower and Heather Lockley of HMRC and Kathryn Boyd of BEIS.

The Forum, aimed primarily at representative organisations such as trade associations and professional bodies, has 3 main objectives - to share the information UK businesses need to prepare for EU Exit; to provide materials to association bodies to cascade to members; and to respond to and gather feedback on existing and new materials circulated in readiness for the UK’s withdrawal.

Phil Bower - HMRC

Mr Bower spoke of border processing and the preparations being put in place for a no-deal scenario, highlighting that new procedures will mirror as far as is possible existing non-EU arrangements for what are described as Third Countries, which the UK will effectively become if we leave without a deal. A package of Day 1 easements for goods movement via roll-on/roll-off ports has been prepared including Transitional Simplified Procedures or TSP’s (enabling importers to defer full customs declarations and duty payments); Intermediaries Liability (reduced liability to enable new agreements to be put in place before day 1) and Guarantee Relaxations.

Apply for an EORI number – this Economic Operator Registration and Identification is essential to ensure customs authorities can exchange and share information with government departments and agencies for statistical and security purposes. (Current documentation advises that Registration should take no more than 10 minutes and that the EORI no. should be issued within 3 working days.)

Confirm that you are able to complete each data field in the customs declaration or engage experienced customs agents to do this

Agree responsibilities with customs agents and logistics providers.

In addition to updated information on importing and exporting in the event that the UK leaves the EU without a deal, HMRC have issued letters to approximately 145,000 businesses to update on preparations including VAT and more recently transitional simplified procedures. Attending members received a hard copy of this letter in their delegate packs. Further details can be found here.

Also included in the delegate packs was information on the newly announced Open General Export Licence (OGEL) for dual use (civilian and military) items. The purpose of the OGEL is to allow, subject to certain conditions, the export of dual use items from the UK to EU Member States and the Channel Islands after the UK leaves the EU without the need for individual licenses. Further information on this including explanatory guidance on the range of items concerned can be found here.

Mr Rumbelow from EEF commented that the easements are intended to assist business importing into / exporting into the UK and should not be viewed as an amnesty to avoid making or recording customs declarations to HMRC.

Responding to a query raised by a member of the UK Aerosol Association on what the EU is doing in regard to VAT and any easements in place for export / importers, Mr Bower advised delegates to engage with customs agents in other markets to confirm.

A query was raised by a delegate from the British Chamber of Commerce, highlighting their

In closing Mr Bower confirmed that, following the issue of new Day 1 processes, the government would give businesses at least 12 months’ notice of any change to these processes to enable sufficient planning.

Heather Lockley – HMRC (VAT)

Whilst the department’s aim is to keep VAT rules as close to current arrangements as possible to minimise impact, attention was drawn to the VAT Technical notice published in August 2018.

In relation to the recently issued Transitional Simplified Procedures, it was confirmed that companies who are already VAT registered would not need to register again to utilise postponed accounting easements and that imports from both the EU and the rest of the world would be able to benefit from this. However it was advised that whilst postal goods with a value in excess of £135 would be able to benefit from postponed accounting, postal goods with a value

below £135 would not and overseas businesses must register for a unique identifier to enable import of goods. It was also confirmed that Low Value Consignment relief would be abolished for all incoming parcels.

In the event that the UK leaves the EU without a deal, the UK will no longer be part of the EU VAT system. Ms Lockley advised that a new UK specific IT system for registration and checking of VAT is planned for March 2019 with guidance to be provided wk/c 11th February. When queried whether this would be ready for Day 1, Ms Lockley confirmed it would.

In relation to legislation, it was confirmed that UK Statutory Instruments covering VAT will be laid in 2 stages with most only being triggered in the event of a no-deal scenario.

A query was raised in relation to small consignments and how UK information is being communicated to EU based countries and businesses. Ms Lockley confirmed that letters had been sent to on-line market places for distribution to sellers and that a copy of this correspondence would be circulates to the group for information.

A further query was raised in relation to consignment relief, for example sample goods. It was confirmed that if the goods were zero rated this will not change on day 1, however overseas businesses will still need to register for a unique identifier.

Kathryn Boyd – BEIS (Goods and Regulatory Compliance)

If the UK leaves the EU without a deal, the UK will be regarded as a 3rd country from day 1. Goods that have already been placed on the EU market before day 1 will not be affected by any change in process. Almost all products meeting EU Regulations will be able to be circulated within the UK, although this will be for a time limited period. When a query was raised as to how long the CE Mark would be recognised within the UK, attendees were advised that this is not confirmed as yet and that the government will consult with businesses in relation to any changes in what are termed as “day 1” processes to ensure sufficient time for business planning.

It is important to note that should there be “no-deal”, EU based distributors of UK goods may become “importers” and vice versa. It is therefore recommended that all distributors familiarise themselves with the increased responsibilities of an “importer”, particularly in relation to product safety and compliance. It is also important to note that UK based “Authorised Representatives” will not be recognised on day 1.

In relation to current EU legislation, the aim is to effectively “lift & shift” with minimal changes.

Whilst the UK will recognise conformity assessments carried out by EU notified bodies, UK notified bodies will no longer be recognised and goods assessed for conformity by a UK notified body will not be able to be sold in the EU without either re-assessment of the product or by transfer of the of files to an EU notified body. Agreements on what will or will not be involved in relation to transfer of files is being left to notified bodies to agree.

A query was raised in relation to notified body status of laboratories in overseas markets, for example in the Far East. It was confirmed that the UK intends to roll over all current mutual recognition agreements, enabling 3rd country notified bodies to be recognised in relation to CE marking conformity assessments.

A query was raised on the impact of a transition period on notified body status and conformity assessment and Ms Boyd advised that were a deal to be agreed it would be a case of “business as usual” during the transition period itself with certification and status being recognised by the EU as it is now.

A further query was raised as to the agreed EU definition of when a product is “placed on the market”, which was answered by a representative of BEIS as being “when a good is available for sale or subject to an offer for sale”.

In relation to testing and in particular acceptance of test reports it was confirmed that where testing is not part of regulation (conformity assessment), reports should continue to be accepted as accreditation is based on international standards (ISO 17025). Conformity assessment by a UK notified body will not be accepted from day 1.

In relation to a query raised on the status of EN harmonised standards in the UK, it was confirmed that there will be no change in status as the UK national standards body BSI is still a member of CEN, CENELEC and ETSI.

Further information was given to attendees in relation to the new UKCA conformity assessment mark, which is proposed for use in the UK as an alternative to the CE mark where conformity assessment is required and has been undertaken by a UK “approved body” (formerly designated as an EU Notified Body).

In most cases the CE mark will still be able to be used in the UK to demonstrate compliance with product legislation, particularly where product legislation enables self-declaration or where a product has been assessed for conformity by an EU Notified body.

However, where products require 3rd party conformity assessment and where this has been undertaken by a UK based Notified Body, corresponding transposed legislation will require that the product is labelled with the UKCA mark from 29th March 2019 and before a product is placed on the market in the UK.

The marking is a similar size to the CE mark and general rules for marking largely mirror that of the CE mark in that:

it may only be placed on a product by the manufacturer or the authorised representative;

that by attaching the mark, the manufacturer takes full responsibility for product conformity in accordance with the relevant legislation;

that the mark may not be used in conjunction with any other marking which may misconstrue the meaning of the mark; and

the mark may only be applied where legislation specifically requires this.

Rules on retention of documentation are also similar to that required of a technical file and a specific UK Declaration of Conformity will be required to accompany all products featuring the UKCA marking.